How to Avoid a Costly Recall

Bridget Calhoun, a partner in Crowell & Moring LLP's Washington office practicing antitrust and consumer protection law, offers these basic strategies to help U.S. companies mitigate the risks of importing unsafe products when contracting with foreign manufacturers:

1. Conduct adequate due diligence of foreign manufacturers, such as:

• Check the manufacturer's litigation and claims history.
• Request references (preferably other U.S. customers).
• Purchase and test products manufactured for others.
• Investigate the manufacturer's finances and insurance status.

2. Structure protective terms and conditions in the purchase contract, including:

• A broad indemnification clause;
• Comprehensive representations and warranties and right to return non-confirming products;
• Comprehensive general liability insurance;
• Permission to conduct facility, product and records inspections; and
• A dispute resolution clause.

3. Perform quality control checks at multiple points in the manufacturing process, including:

• Multiple quality control checks on samples throughout the manufacturing process ;
• Periodic inspections of the manufacturer's books and records; and
• On-site facility inspections.

See Also

• Special Report: Manufacturing in China: Taming the Dragon
• Five Practical Strategies for Building a Chinese Workforce